The Supply Chain Game Has Changed

The supply chain industry has undergone a transformation in recent years, the effects of which are shaking up the business world.  The game is no longer the same. For those who do not wish to adapt and develop new strategies, keeping up with the competition will prove to be increasingly difficult. In a similar manner to which Bill Walsh’s Super Bowl winning West Coast Offense revolutionized the National Football League and frustrated opposing defensive units, changing the way the game was played, so too is supply chain management set to undergo a revamp. The following 4 factors will play a major role.

1. Is 3D printing the “chosen one”?

From Anakin Skywalker to Achilles, the myth or tale of the “chosen one” is a timeless concept in story-telling. It foretells that in times of strife, a prophesised hero will arise and save the world or known universe, changing it for the better [or worse]; the process can at times be destructive.

While there will likely be no cataclysmic event in the wake of what may be the era of 3D printing, it has been described as: “the biggest single disruptive phenomenon to impact global industry since assembly lines were introduced in early twentieth century America industry.”

As noted in a recent white paper published by Transport Intelligence, titled “The Implications of 3D-Printing for the Global Logistics Industry”, 3D printing is already being used in the manufacturing process to help produce up to 30 percent of finished products.  The process allows products to be made by spraying them into existence from fine powdered substances such as metals and ceramics.

Still an on-going process, current projections estimate 3D printing will play a role in the production of up to 80 per cent of finished goods by 2020. One thing is clear: the recent developments in 3D printing are a game-changer, and businesses must be willing to change their strategy accordingly. When 3D printing becomes commonplace in global networks, large areas of the industry are likely to be removed, as products will be made locally, simplifying the supply chain.

2. Sharing is caring

The effect Social Media is having on the supply chain is already beginning to be felt. Businesses are increasingly acknowledging the need to implement some form of transparency, and “shared” information with the consumer. Source map makes for a great example of this; businesses can publish where each product and its various components originate from, and allow consumers to view this information visually on a map.

At the same time, some businesses still regard utilizing social media within their supply chain with a certain level of scepticism. Understandably so, as in light of recent scandals, the supply chain industry already stands under much scrutiny. Ultimately though, the benefits of Social Media can outweigh the cost of the perceived added scrutiny. Social media can offer a clearer view for businesses at each step of the supply chain, meaning quicker and more efficient means of communication. This, in turn, results in more efficient international networks.

3. Globalization and the Cloud

The complexity of the modern supply chain and the growing need for logistics professionals is an inevitable by-product of the constantly growing level of globalization. Businesses not only need to manage multiple, large-scale product lines, but also supply chain logistics. A further issue to contend with and acknowledge, is that companies often find it difficult to obtain an overview of their supply chain because the information systems they have been using for the past decades were designed to operate within a single company—not across a network of several.

Of course, the holy-grail and solution to solving the complexities of the modern global supply chain is complete visibility across the entire network. With further developments in cloud technology, such a vision is not too far from becoming a reality.

Cloud-based supply chain management offers businesses with increasingly complex global supply chains the ability to manage inventory and demand forecasts online and resolve issues at any time or place, on any device. Yet in a recent survey we conducted, only 12 per cent of SMEs have adopted the cloud, suggesting it is still regarded with some distrust. Security concerns were cited as the main cause of uncertainty. The reality is that cloud technology offers a much higher level of security than most businesses can often match themselves.

4. The Multi-echelon Approach

The implementation of a multi-echelon approach to supply chain management can also prove advantageous for businesses. Multi-echelon optimization can lead to visibility across the supply chain by optimizing inventory across the entire network, not just individual warehouses.

In this manner, businesses can take into account varying levels of risk as well as warehouse costs to determine whether it is more cost-effective to store stock at the start of the supply chain, or closer to the customer. Through strategically shifting stock to the optimal location, businesses can reduce uncertainty and the requirement for safety stock. Additionally, management teams are able to improve cash flow by freeing up capital which would have otherwise been tied-up in redundant safety stock.

The multi-echelon approach supports complex global supply chains, and allows businesses to improve levels of efficiency across the entire network.

Closing Thought

The strategic edge that the West Coast offense brought to the National Football League was considered quite unconventional for its time. It actually evolved out of a lack of talent coach Bill Walsh had on his offensive unit. Walsh was forced to develop alternative methods to play the game and win. Although initially regarded with some scorn, it was quickly adopted by most major franchises, and is still used in some incarnation or another to this day.  Its “outside of the box” thinking has led to the formation of some other modern day, avant-garde offenses such as the Wildcat and Pistol.

The key point our analogy serves is this; the resources and technologies to give us the competitive edge are available now more than ever, but it is important to revaluate convention and adopt the best practice from an unbiased perspective.

What other developments have you observed in the supply chain sector; will you seek to adopt and develop them?